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Although the Enterprise Chamber (Ondernemingskamer), by decision of 27 May 2010, established in no uncertain terms that there was mismanagement at PCM within the context of the arrival and departure of Apax as a shareholder, almost all the parties involved buy now have announced in the media that they will not hold the (former) directors and (former) shareholders of PCM liable for damages suffered. To a large extent, this follows from the fact that inquiry proceedings do not deal with - and therefore the Enterprise Chamber does not examine - the question who is liable for the mismanagement conducted.

In order to obtain an order against a (former) director and/or (former) shareholder to pay damages, separate civil proceedings will have to be initiated. In such subsequent proceedings, the court may see the qualification “mismanagement” as an important indicator of liability. Nevertheless, the threshold to be met in terms of evidence remains relatively high, which often makes the outcome highly uncertain. This, in combination with the relatively high costs and long duration of liability proceedings, makes the parties involved frequently decide to simply resign themselves to the qualification “mismanagement” and the measures taken by the Enterprise Chamber within that context (e.g. annulment of a board resolution or shareholders’ resolution, or the dismissal of one or more members of the executive board and/or supervisory board).

For more information please contact Sander Maarschalkerweerd, Practice Area Corporate.

Good governance requirements
Pursuant to the new Bill, every schoolboard must provide for a segregation of duties between the board and the internal supervision of the board. This can be done by setting up a supervisory council in addition to the school board. However, a segregation of duties is also feasible within the board (one-tier) or between the board and the directors. The supervisors must be appointed on the basis of profiles disclosed in advance. Parents and employees are given an opportunity to make a binding nomination for one supervisor. The supervisory board is granted statutory powers, such as budget approval and the right to designate the accountant.

Quality requirements
The Bill provides further funding regulations, such as minimal educational quality requirements. In primary education, these are requirements for the learning results with regard to the Dutch language, mathematics and arithmetic. In secondary education, the learning results are linked to the average final exam results and the graduation figures. If the Education Inspectorate is of the opinion that a school is very weak, the school board is required to inform the parents about the findings. If it fails to do so, the Education Inspectorate itself will send the summary of its report to the students’ parents.

In addition, the Bill provides for additional government intervention possibilities. These are to ensure that the government can intervene more efficiently and effectively in case of poor governance or poor educational results. The Minister of Education, Culture and Science can issue instructions in the event of administrative mismanagement. An instruction contains the grounds for the mismanagement and the measures to be taken. In exceptional situations, a public or public-funded schools may be closed or the government funding may be discontinued.

Implementation period
The schools have until August 1, 2011 to implement all changes in their Articles of Association and organisation. Van Doorne will be pleased to help you implement those changes. For more detailed comments on the new Bill (in Dutch), click here. For example, we can identify the elements that you need to change in the Articles of Association, the regulations, the management rules and/or participation rules or regulations.

For more information please contact Nienke van Dijk or Martijn Nolen, Practice Area Education.

Under current legislation, employees on extended sick leave accrue holiday leave entitlement only over the past half year. Decisions handed down by the European Court of Justice, determining that it is contrary to the Working Time Directive if an employee loses his right to holidays if he was unable to take them due to sickness mean that the Dutch statutory provisions must be amended. The bill, which does away with the restriction on holiday leave accrual in the event of sickness, proposes the necessary amendments.

The bill also provides for settling sick leave against the statutory (minimum) holiday leave, provided the employee agrees. The option of agreeing in writing that sick leave is to be settled against holiday leave in excess of the statutory minimum agreed for that year is left unaffected by the bill.

In order to stimulate employees to take their accrued holiday leave, the bill proposes an expiry period for the statutory holidays, requiring employees to take their accrued leave within one and a half years. An expiry period of five years will apply in the event the employee has no opportunity to take the accrued holidays. The same expiry period will also apply to holiday leave in excess of the statutory minimum.

Whether the recently-submitted bill will make it through the legislative procedure in the House of Representatives unscathed remains to be seen.

For more information please contact Cara Pronk, Practice Area Employment.

The European Commission demanded access to correspondence between AKZO Nobel (and one of its subsidiaries) and the in-house lawyer, an attorney of the Netherlands Bar. The European Court acknowledged that the correspondence between a lawyer and his client must be protected, also in European cases. However, this protection is not unconditional. The Court held that it only applies if two conditions are met.

Firstly, the exchange with the lawyer must be connected to the “client’s rights of defence”. Secondly, the exchange must emanate from ’independent lawyers’. Due to their economic dependence and close ties with the employer, the Court held that in-house lawyers are not independent. Accordingly, there is no legal professional privilege for advice and other correspondence of the in-house lawyer and the company.

The case in question pertained to an issue of European competition law, but the reasoning could also apply in other circumstances. This decision may therefore have far-reaching consequences for in-house lawyers. In the Netherlands, the legislature wanted to equate the in-house lawyer with an external lawyer. Interest groups, such as the Dutch Bar Association, will carefully consider the question of whether the decision in the Akzo case should change this. At any rate, as a result of this decision the in-house lawyer will need to clearly attribute that the advice he distributes comes form an external lawyer.

For more information please contact Sarah Beeston, Practice Area European and competition law.

Telecom watchdog OPTA had earlier required the cable companies providing analogue television via cable in the Netherlands (such as UPC and Ziggo) to open up their cable networks to other parties. Based on a market analysis, OPTA had concluded that there was insufficient competition in this market because, briefly put, every cable company has a monopoly in its own catchment area. By allowing other parties access to the networks of the regional monopolists, market dynamics could be restored to the benefit of consumers in the form of more choice and lower prices, according to OPTA.

Incidentally, competing providers would not be able resell the full package of, for example, UPC or Ziggo. They had to make their own arrangements with the programme providers about the broadcasting rights, and would then be able to offer those programmes via UPC's or Ziggo's network.

The regulation of the cable market by OPTA had already resulted in a newcomer on the market: Tele2 offered its customers cable television, and other providers were also preparing to enter the market.

The Tribunal has now nipped these burgeoning market dynamics in the bud. OPTA announced that it will perform a new market analysis. This will at least take a year. It will then become evident whether OPTA still sees sufficient grounds to open up the cable market as yet.

Meanwhile Tele2 has stopped offering cable television.

For more information please contact Sarah Beeston, Practice Area European and competition law.

The law gives both the works council and the patients’ council access to appeal before the OK. The works council can file an appeal if the healthcare institution fails to give it the opportunity to submit a recommendation in the instances prescribed by the Works Councils Act, or fails to act in accordance with the works council’s recommendation without providing reasons. By virtue of the Care Institutions (Eligibility) Act, a healthcare institution must give a patient representation body - in practice that is usually the (central) patients’ council - the right of inquiry. Patients’ councils can exercise their right of inquiry if there is reason to doubt proper management. When the pending Clients’ Rights (Care Industry) Bill enters into force, the co-determination powers of the patients’ council will be even more comprehensive.

In its recent judgments, the OK confirmed that it is up to the entrepreneur to make (strategic) choices and decisions. When prescribed by law, these decisions must be preceded by a timely request for recommendation or consent, accompanied by sound information. Within that context, the healthcare institution must provide insight into the reasoning behind the decision. Serious doubts voiced by the works council or the patients’ council regarding said decisions must be properly addressed. In certain circumstances this may include investigating an alternative suggested by the works council or patients’ council.

In summary, healthcare institution administrators should be aware of the rights assigned to works councils and patients’ councils. Failure to adhere to the statutory obligations with regard to these bodies can have far-reaching consequences.

For more information please contact Paula Boshouwers, Practice Area Health Care.

The Act on fixed book prices prescribes that the publisher has to establish a fixed book price for books that he publishes for the first time in a certain version in the Netherlands. The bookseller must then apply that fixed price when selling the book to an end customer.

SplinQ operates websites aimed at Dutch consumers, on which booksellers can advertise. On these websites, consumers can click on a link to the bookseller’s webshop where they can buy books. The purchase agreement is then concluded between the consumer and the bookseller. The bookseller pays commission for each sale realised by clicking on SplinQ. The advertising revenues that SplinQ generates will subsequently be partially re-distributed among the consumers. Via SplinQ’s website, the consumer can see in advance what part of the purchase amount will be paid back by SplinQ.

SplinQ argues that the bookseller charges the fixed book price and that the bookseller does not give any discount. It is SplinQ which redistributes its advertising revenues among the consumers without the booksellers being able to enforce this. SplinQ is of the opinion that this arrangement is, therefore, not contrary to the Act on fixed book prices. However, the District Court ruled differently. The legislature’s point of departure is that the bookseller applies the fixed book price when making the sale to the consumer and that the consumer actually pays that price. According to the District Court, the consumer receives a de facto discount on the purchase of his book via the cash-back arrangement, and this discount is not covered by the closed system of discounts under the Act on fixed book prices. Should this be any different, it would be simple to dodge the Act on fixed book prices.

In addition, the District Court holds that there is no conflict with European law with regard to the free movement of goods and services. The Act on fixed book prices is applicable to anyone who sells books in Dutch or Frisian in the Netherlands. In addition, SplinQ is a Dutch company and the advertisers on its website are Dutch booksellers aiming to sell Dutch books in the Netherlands. Finally, there is no common arrangement for this issue.

For more information please contact Ricardo Dijkstra, Practice Area Intellectual Property.

Other countries accused the Hague courts of unauthorised cross-border adjudication. The European Court of Justice concurred, as demonstrated in the cases GAT/ LuK and Roche/Primus, in which the Court of Justice appeared to have effectively terminated cross-border jurisdiction in patent cases.

However, this termination was not final: The Hague's District Court subsequently found it had jurisdiction to rule on cross-border provisional infringement injunctions even if the validity of the invoked patent was contested (Fort Vale/Pelican). It reasoned that it is not definitively ruling on the validity of the patent but merely providing a preliminary assessment. The District Court found that, although the Court of Justice determined in GAT/LuK that the national court does not have jurisdiction to hand down cross-border decisions if the validity of the invoked patent is contested, it did not take an outspoken position on provisional claims.

In a decision handed down on 15 September 2010, The Hague District Court expressed doubts as to whether its Fort Vale/Pelican decision was correct and indicated that it intended to request preliminary rulings on this point (Solvay/Honeywell).

Apparently, the District Court found room for requesting preliminary rulings with regard to the Court of Justice’s Roche/Primus decision as well. Briefly put, Roche/Primus addresses the cross-border jurisdiction to impose infringement injunctions with regard to companies registered in various Member States against acts committed in one or more of those states. These defendants were summoned before the Dutch court because the claims against the parties were alleged to be so closely related that the proper administration of justice required simultaneous adjudication, in order to avoid contradictory decisions being rendered in separate adjudication of the cases.

Although there was no need in the Roche/Primus decision to address the question of when precisely there are “contradictory decisions”, the Court of Justice did find that “in order that decisions may be regarded as contradictory it is not sufficient that there be a divergence in the outcome of the dispute, but that divergence must also arise in the context of the same situation of law and fact”. The Court of Justice rendered a declaratory judgment that the connection required for the application of cross-border jurisdiction of Article 6(1) of the Brussels I Regulation vis-à-vis foreign defendants could not be established in that case.

As I understand it, the District Court does not apply the criterion of “the same situation of law and fact” as distinguished in the Roche/Primus judgment because that judgment apparently does not apply to “a situation in which two or more companies from different Member States are all individually accused in proceedings before a court in one of those Member States of committing the same infringement (for example, offering the same product) of the same national part of a European patent as valid in yet another Member State”. I cannot follow the District Court’s view. As I see it, the District Court is too quick to ignore the applicability of the criterion in the Roche/Primus judgment and subsequently voices its intention to request preliminary rulings on the concept of irreconcilable judgments in Article 6 (1) of the Brussels I Regulation. The criterion from the Roche/Primus judgment should have been applied, I believe, to lead to the conclusion that cross-border jurisdiction vis-à-vis the foreign defendants cannot be assumed by virtue of Article 6 (1) of the Brussels I Regulation. Irrespective of whether the same situation of fact applies, I believe in any event that the same situation of law - infringement of a European patent being adjudicated under national law - does not exist.

For more information please contact Ricardo Dijkstra, Practice Area Intellectual Property.

The law provides that extrajudicial costs must be reasonable. In practice, such an open standard leads to uncertainty. Although courts have developed standards for this purpose (the Voorwerk II report), the debtor will often decide not to let the matter go to court, particularly in the event of debts relating to relatively small amounts. The debtor will simply opt for paying the debt, including the extrajudicial collection costs charged.

In order to end the uncertainty in this respect, it is proposed that with regard to debts up to € 25,000 only a certain capped percentage of the principal amount that is due can be charged as costs, with the percentage falling as the debt increases.

For more information please contact Robert Hendrikse, Practice Area Litigation and Insurance.

The main changes and simplifications provided for in the bill (no. 32458) are:

1. The board will be allowed to waive the obligation to prepare a written report explaining the reasons for the proposed merger. This requires the approval of all the members or shareholders of the merging legal entities.

2. The board may also decide not to draw up an interim accounting statement, provided that all the members or shareholders of the merging legal entities so agree. This results in a reduction of the administrative burden. In accounting terms, a merger taking place in the second half of the financial year usually has retroactive effect to the beginning of the year. In that case, drawing up an interim accounting statement merely for the purpose of the merger will then only cause additional and often unnecessary costs.

3. In the event of major changes to the assets and liabilities after the merger proposal was filed which affected the information in the proposal or the explanation, the board's obligation to inform the general meeting and the other legal entity to be merged may be waived. This must also be approved by all members and shareholders of the relevant merging legal entity.

4. After the bill has been implemented, a creditor opposing the merger proposal has the burden of proof himself. He must demonstrate that the merger leads to doubt as to whether adequate safeguards have been obtained or that the financial position of the acquiring legal entity after the merger does not provide the same safeguards that his claim will be satisfied.

5. At present, only the acquiring legal entity can decide to carry out a merger pursuant to a board resolution. The bill provides for the possibility that, in the case of a merger with a legal entity in which it holds all the shares, this disappearing legal entity may also decide to carry out the merger pursuant to a board resolution instead of a shareholders' resolution.

Similar provisions are also envisaged in the bill for divisions (demergers); however, the relaxed provisions mentioned in 1 and 2 only apply to pure divisions to newly incorporated legal entities and to divisions to a newly incorporated affiliate company.

The European Directive must have been transposed into Dutch legislation by 30 June 2011.

For more information please contact Nienke van Dijk, Notarial Practice .

Under the system applicable until 1 October 2010, several permits were sometimes required for a (construction) project, which could be obtained at different counters. This is no longer the case under the Wabo. All permits required for a construction project are now covered by a single permit, i.e. the environment permit. The environment permit is a single, integrated permit for construction, residential use, monuments, spatial planning, nature and the environment.

The intention is for the environment permit to reduce the administrative burdens for companies and citizens. In addition, the environment permit is intended to lead to improved services and shorter procedures.

Various permit procedures have been joined together in a single procedure. The legislature did not intend to introduce substantive changes in the various procedures. However, a striking procedural change is that the ‘project decision’ (briefly put: exemption from a zoning plan) has lapsed. Termination of spatial planning inconsistencies will now be included in the environment permit. The Wabo does not contain any transitional law with regard to project decisions. Accordingly, a project decision granted prior to 1 October 2010 cannot obviate the spatial planning inconsistency of a construction project for which the application was or will be filed after 1 October 2010. This may slow things down.

The question is whether the objectives with regard to efficiency and simplicity have been abandoned along with the complicated legislative operation; after all, legal guarantees did have to remain intact. Time will tell.

For more information please contactt Cees Kniestedt or Wera Flapper, Practice Area Property.

The ECJ held in this matter that the transfer of a plot of land on which there still is an old building, the demolition of which has already been started by the seller in order to build a new structure on it, constitutes transfer of a 'vacant lot’. According to the ECJ, such transfer and demolition must be considered a single transaction aimed at the delivery of a vacant site for VAT purposes.

The ECJ concludes that, in this case, the condition of the immovable property after the completion of the demolition work is decisive. To date, the condition of the immovable property at the time of transfer was the only thing considered with regard to the transfer of real estate in the Netherlands. The significance of the qualification 'vacant lot’ or ‘construction site’ is that a transfer of a construction site is subject to VAT and the buyer can therefore obtain the immovable property free of real estate transfer tax.

Interestingly, the Advocate General notes in her opinion of 17 June 2010 that the intention is that the Member States include all the sites meant for construction under the concept ‘construction site’. We look forward with great interest to the Supreme Court’s decision in this matter.

For more information please contact Martijn Kouffeld, Practice Area Property and Tax.